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The Effects of Bilateral Tax Treaties on U.S. FDI Activity *

The Effects of Bilateral Tax Treaties on U.S. FDI Activity *

Chapter:

(p.485)
18.
THE EFFECTS OF BILATERAL TAX TREATIES ON U.S. FDI ACTIVITY
*

Source:

The Effect of Treaties on Foreign Direct Investment

Author(s):

Bruce A. Blonigen

Ronald B. Davies

Publisher:

Oxford University Press

DOI:10.1093/acprof:oso/9780195388534.003.0018

This chapter presents the first estimates of the effects of bilateral treaties governing the taxation of foreign direct investment (FDI) on bilateral FDI activity. The chapter proceeds as follows. Section A discusses U.S. tax treaties including their history, how they are formed, and their key functions. Section B presents empirical methodology and data. Section C presents results and the last section concludes. There is no systematic evidence that bilateral tax treaties affect FDI activity, despite statements by the Organization for Economic Cooperation and Development (OECD) and other sources that such agreements are meant to increase the efficiency of world capital flows. Instead, the results suggest that either the provisions of a treaty have no effect, or the positive and negative aspects of treaty formation largely cancel one another.

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see www.oxfordscholarship.com/page/privacy-policy).date: 19 November 2018